PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company
of PCB Bank (the “Bank”), today reported net income of $7.5
million, or $0.52 per diluted common share, for the second quarter
of 2023, compared with $10.3 million, or $0.70 per diluted common
share, for the previous quarter and $9.1 million, or $0.60 per
diluted common share, for the year-ago quarter.
Q2 2023 Highlights
- Net income totaled $7.5 million, or $0.52 per diluted common
share, for the current quarter;
- Recorded a provision (reversal) for credit losses(1),(2) of
$197 thousand for the current quarter compared with $(2.8) million
for the previous quarter and $(109) thousand for the year-ago
quarter;
- Allowance for Credit Losses (“ACL”)(1) on loans to loans
held-for-investment ratio was 1.17% at June 30, 2023 compared with
1.18% at March 31, 2023 and 1.15% at June 30, 2022;
- Net interest income was $21.7 million for the current quarter
compared with $22.4 million for the previous quarter and $21.4
million for the year-ago quarter. Net interest margin was 3.55% for
the current quarter compared with 3.79% for the previous quarter
and 4.01% for the year-ago quarter;
- Gain on sale of loans was $769 thousand for the current quarter
compared with $1.3 million for the previous quarter and $2.0
million for the year-ago quarter;
- Total assets were $2.56 billion at June 30, 2023, an increase
of $55.8 million, or 2.2%, from $2.50 billion at March 31, 2023, an
increase of $136.3 million, or 5.6%, from $2.42 billion at December
31, 2022, and an increase of $211.8 million, or 9.0%, from $2.34
billion at June 30, 2022;
- Loans held-for-investment were $2.12 billion at June 30, 2023,
an increase of $30.0 million, or 1.4%, from $2.09 billion at March
31, 2023, an increase of $76.4 million, or 3.7%, from $2.05 billion
at December 31, 2022, and an increase of $289.4 million, or 15.8%,
from $1.83 billion at June 30, 2022; and
- Total deposits were $2.19 billion at June 30, 2023, an increase
of $46.5 million, or 2.2%, from $2.14 billion at March 31, 2023, an
increase of $142.2 million, or 7.0%, from $2.05 billion at December
31, 2022, and an increase of $190.6 million, or 9.5%, from $2.00
billion at June 30, 2022.
“I am pleased with our solid results in the second quarter,”
said Henry Kim, President and Chief Executive Officer. “In spite of
the challenging macroeconomic environment, our continued focus on
maintaining fundamentals in our institution provided stable level
of liquidity, robust capital, and strong asset quality.”
“During the second quarter, our cash and cash equivalents to
total assets increased to 8.7% of total assets and our deposit
balances increased $46.5 million, or 2.2%. Several days after June
30, 2023, we established Borrower-in Custody Program with Federal
Reserve Bank that provided an additional borrowing capacity of
$268.9 million. Such additional borrowing capacity in combination
of other borrowing capacities and cash and cash equivalent would
have covered approximately 117.1% of deposits not covered by
deposit insurance compared with 91.1% without the additional
borrowing capacity at June 30, 2023.”
“Tangible common equity per share increased to $18.94 and our
total capital ratio was 17.57%. Our loan balance increased 1.4% to
$2.12 billion compared with $2.09 billion at March 31, 2023, and
our asset quality continues to be strong with non-performing assets
to total asset ratio of 0.15% and classified assets to total assets
ratio of 0.27%.”
“Our commitment to deliver exceptional service with precise
banking products to our customers and the opportunities to expand
our geographical footprint gives us motivation to be excited about
our prospects for continued growth in the second half of 2023 and
beyond,” concluded Kim.
-------------------------------------------------------------------------------------
(1)
Provision (reversal) for credit losses and
ACL for reporting periods beginning with January 1, 2023 are
presented under ASC 326, while prior period comparisons continue to
be presented under legacy ASC 450 and ASC 310 in this release.
(2)
Provision for credit losses on off-balance
sheet credit exposures of $36 thousand and $38 thousand,
respectively, for the year-ago quarter and previous year-to-date
period were recorded in Other Expense on Consolidated Statements of
Income (Unaudited).
Financial Highlights
(Unaudited)
($ in thousands, except per share
data)
Three Months
Ended
Six Months Ended
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Net income
$
7,477
$
10,297
(27.4
)%
$
9,092
(17.8
)%
$
17,774
$
19,332
(8.1
)%
Diluted earnings per common share
$
0.52
$
0.70
(25.7
)%
$
0.60
(13.3
)%
$
1.22
$
1.27
(3.9
)%
Net interest income
$
21,717
$
22,414
(3.1
)%
$
21,351
1.7
%
$
44,131
$
41,344
6.7
%
Provision (reversal) for credit losses
(1)
197
(2,778
)
NM
(109
)
NM
(2,581
)
(1,300
)
98.5
%
Noninterest income
2,657
3,021
(12.0
)%
3,648
(27.2
)%
5,678
8,934
(36.4
)%
Noninterest expense
13,627
13,754
(0.9
)%
12,245
11.3
%
27,381
24,316
12.6
%
Return on average assets (2)
1.19
%
1.69
%
1.65
%
1.44
%
1.78
%
Return on average shareholders’ equity
(2)
8.82
%
12.46
%
12.48
%
10.62
%
14.13
%
Return on average tangible common equity
(“TCE”) (2),(3)
11.08
%
15.70
%
13.85
%
13.35
%
14.92
%
Net interest margin (2)
3.55
%
3.79
%
4.01
%
3.67
%
3.94
%
Efficiency ratio (4)
55.91
%
54.08
%
48.98
%
54.97
%
48.36
%
($ in thousands, except per share
data)
6/30/2023
3/31/2023
% Change
12/31/2022
% Change
6/30/2022
% Change
Total assets
$
2,556,345
$
2,500,524
2.2
%
$
2,420,036
5.6
%
$
2,344,560
9.0
%
Net loans held-for-investment
2,097,560
2,067,748
1.4
%
2,021,121
3.8
%
1,811,939
15.8
%
Total deposits
2,188,232
2,141,689
2.2
%
2,045,983
7.0
%
1,997,607
9.5
%
Book value per common share (5)
$
23.77
$
23.56
$
22.94
$
22.36
TCE per common share (3)
$
18.94
$
18.72
$
18.21
$
17.73
Tier 1 leverage ratio (consolidated)
13.84
%
13.90
%
14.33
%
15.37
%
Total shareholders’ equity to total
assets
13.32
%
13.47
%
13.86
%
14.26
%
TCE to total assets (3), (6)
10.61
%
10.71
%
11.00
%
11.31
%
(1)
Provision for credit losses on off-balance
sheet credit exposures of $36 thousand and $38 thousand,
respectively, for the year-ago quarter and previous year-to-date
period were recorded in Other Expense on Consolidated Statements of
Income (Unaudited). See Provision (reversal) for credit losses
included in the Result of Operations discussion for additional
information.
(2)
Ratios are presented on an annualized
basis.
(3)
Non-GAAP. See “Non-GAAP Measures” for
reconciliation of this measure to its most comparable GAAP
measure.
(4)
Calculated by dividing noninterest expense
by the sum of net interest income and noninterest income.
(5)
Calculated by dividing total shareholders’
equity by the number of outstanding common shares.
(6)
The Company did not have any intangible
asset component for the presented periods.
Result of Operations
(Unaudited)
Net Interest Income and Net Interest Margin
The following table presents the components of net interest
income for the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Interest income/expense on
Loans
$
32,960
$
31,229
5.5
%
$
21,243
55.2
%
$
64,189
$
41,433
54.9
%
Investment securities
1,136
1,102
3.1
%
668
70.1
%
2,238
1,144
95.6
%
Other interest-earning assets
2,742
2,205
24.4
%
535
412.5
%
4,947
763
548.4
%
Total interest-earning assets
36,838
34,536
6.7
%
22,446
64.1
%
71,374
43,340
64.7
%
Interest-bearing deposits
15,121
11,913
26.9
%
1,041
1,352.5
%
27,034
1,891
1,329.6
%
Borrowings
—
209
(100.0
)%
54
(100.0
)%
209
105
99.0
%
Total interest-bearing liabilities
15,121
12,122
24.7
%
1,095
1,280.9
%
27,243
1,996
1,264.9
%
Net interest income
$
21,717
$
22,414
(3.1
)%
$
21,351
1.7
%
$
44,131
$
41,344
6.7
%
Average balance of
Loans
$
2,097,489
$
2,072,415
1.2
%
$
1,804,368
16.2
%
$
2,085,021
$
1,788,958
16.5
%
Investment securities
142,136
142,079
—
%
135,324
5.0
%
142,107
129,310
9.9
%
Other interest-earning assets
213,883
186,809
14.5
%
195,633
9.3
%
200,420
197,267
1.6
%
Total interest-earning assets
$
2,453,508
$
2,401,303
2.2
%
$
2,135,325
14.9
%
$
2,427,548
$
2,115,535
14.7
%
Interest-bearing deposits
$
1,527,522
$
1,410,812
8.3
%
$
1,001,424
52.5
%
$
1,469,490
$
1,017,629
44.4
%
Borrowings
—
15,811
(100.0
)%
11,132
(100.0
)%
7,862
10,768
(27.0
)%
Total interest-bearing liabilities
$
1,527,522
$
1,426,623
7.1
%
$
1,012,556
50.9
%
$
1,477,352
$
1,028,397
43.7
%
Total funding (1)
$
2,155,649
$
2,114,198
2.0
%
$
1,902,247
13.3
%
$
2,135,039
$
1,893,691
12.7
%
Annualized average yield/cost
of
Loans
6.30
%
6.11
%
4.72
%
6.21
%
4.67
%
Investment securities
3.21
%
3.15
%
1.98
%
3.18
%
1.78
%
Other interest-earning assets
5.14
%
4.79
%
1.10
%
4.98
%
0.78
%
Total interest-earning assets
6.02
%
5.83
%
4.22
%
5.93
%
4.13
%
Interest-bearing deposits
3.97
%
3.42
%
0.42
%
3.71
%
0.37
%
Borrowings
—
%
5.36
%
1.95
%
5.36
%
1.97
%
Total interest-bearing liabilities
3.97
%
3.45
%
0.43
%
3.72
%
0.39
%
Net interest margin
3.55
%
3.79
%
4.01
%
3.67
%
3.94
%
Cost of total funding (1)
2.81
%
2.33
%
0.23
%
2.57
%
0.21
%
Supplementary information
Net accretion of discount on loans
$
751
$
671
11.9
%
$
907
(17.2
)%
$
1,422
$
1,815
(21.7
)%
Net amortization of deferred loan fees
$
247
$
175
41.1
%
$
606
(59.2
)%
$
422
$
1,771
(76.2
)%
(1)
Total funding is the sum of
interest-bearing liabilities and noninterest-bearing deposits. The
cost of total funding is calculated as annualized total interest
expense divided by average total funding.
Loans. The increases in average
yield for the current quarter and year-to-date period compared with
the same periods of 2022 were primarily due to an increase in
overall interest rates on loans from the rising interest rate
environment, partially offset by decreases in net accretion of
discount on loans and net amortization of deferred loan fees from
the decreased amount of SBA PPP loan payoffs.
The following table presents a composition of total loans by
interest rate type accompanied with the weighted-average
contractual rates as of the dates indicated:
6/30/2023
3/31/2023
12/31/2022
6/30/2022
% to Total
Loans
Weighted-
Average
Contractual
Rate
% to Total
Loans
Weighted-
Average
Contractual
Rate
% to Total
Loans
Weighted-
Average
Contractual
Rate
% to Total
Loans
Weighted-
Average
Contractual
Rate
Fixed rate loans
22.6
%
4.64
%
23.4
%
4.64
%
23.2
%
4.51
%
24.5
%
4.35
%
Hybrid rate loans
39.2
%
4.62
%
39.0
%
4.51
%
39.1
%
4.40
%
37.0
%
4.11
%
Variable rate loans
38.2
%
8.39
%
37.6
%
8.23
%
37.7
%
7.86
%
38.5
%
5.12
%
Investment Securities. The
increases in average yield for the current quarter and year-to-date
period were primarily due to a decrease in net amortization of
premiums on securities and higher yield on newly purchased
investment securities.
Other Interest-Earning Assets. The
increases in average yield for the current quarter and year-to-date
period were primarily due to an increased interest rate on cash
held at the Federal Reserve Bank account.
Interest-Bearing Deposits. The
increases in average cost for the current quarter and year-to-date
period were primarily due to an increase in market rates and the
migration of noninterest-bearing demand deposits to
interest-bearing deposits attributable to the rising market rates.
To retain existing and attract new customers, the Bank offers
competitive rates on deposit products in the rising interest rate
environment.
Provision (Reversal) for Credit Losses
The following table presents a composition of provision
(reversal) for credit losses for the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Provision (reversal) for credit losses on
loans
$
157
$
(2,417
)
NM
$
(109
)
NM
$
(2,260
)
$
(1,300
)
73.8
%
Provision (reversal) for credit losses on
off-balance sheet credit exposure (1)
40
(361
)
NM
36
11.1
%
(321
)
38
NM
Total provision (reversal) for credit
losses
$
197
$
(2,778
)
NM
$
(73
)
NM
$
(2,581
)
$
(1,262
)
104.5
%
(1)
Provision for credit losses on off-balance
sheet credit exposures for previous and year-ago quarters were
recorded in Other Expense on Consolidated Statements of Income
(Unaudited).
On January 1, 2023, the Company adopted the provisions of ASC
326 through the application of the modified retrospective
transition approach. Provision (reversal) for credit losses and ACL
for reporting periods beginning with January 1, 2023 are presented
under ASC 326, while prior period comparisons continue to be
presented under legacy ASC 450 and ASC 310 in this release. See
CECL Adoption and Allowance for Credit Losses sections included in
the Balance Sheet section of this release for additional
information.
The reversal for credit losses for the current year-to-date
period was primarily due to net recoveries and the improvement in
the economic forecast.
Noninterest Income
The following table presents the components of noninterest
income for the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Gain on sale of loans
$
769
$
1,309
(41.3
)%
$
2,039
(62.3
)%
$
2,078
$
5,816
(64.3
)%
Service charges and fees on deposits
369
344
7.3
%
330
11.8
%
713
633
12.6
%
Loan servicing income
868
860
0.9
%
755
15.0
%
1,728
1,455
18.8
%
Bank-owned life insurance income
184
180
2.2
%
175
5.1
%
364
347
4.9
%
Other income
467
328
42.4
%
349
33.8
%
795
683
16.4
%
Total noninterest income
$
2,657
$
3,021
(12.0
)%
$
3,648
(27.2
)%
$
5,678
$
8,934
(36.4
)%
Gain on Sale of Loans. The
following table presents information on gain on sale of loans for
the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Gain on sale of SBA loans
Sold loan balance
$
16,762
$
27,133
(38.2
)%
$
38,442
(56.4
)%
$
43,895
$
78,125
(43.8
)%
Premium received
1,209
2,041
(40.8
)%
2,600
(53.5
)%
3,250
6,806
(52.2
)%
Gain recognized
769
1,309
(41.3
)%
2,039
(62.3
)%
2,078
5,816
(64.3
)%
Loan Servicing Income. The
following table presents information on loan servicing income for
the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Loan servicing income
Servicing income received
$
1,317
$
1,284
2.6
%
$
1,287
2.3
%
$
2,601
$
2,517
3.3
%
Servicing assets amortization
(449
)
(424
)
5.9
%
(532
)
(15.6
)%
(873
)
(1,062
)
(17.8
)%
Loan servicing income
$
868
$
860
0.9
%
$
755
15.0
%
$
1,728
$
1,455
18.8
%
Underlying loans at end of period
$
539,160
$
540,502
(0.2
)%
$
537,990
0.2
%
$
539,160
$
537,990
0.2
%
The Company services SBA loans and certain residential property
loans sold to the secondary market.
Noninterest Expense
The following table presents the components of noninterest
expense for the periods indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Salaries and employee benefits
$
8,675
$
8,928
(2.8
)%
$
8,125
6.8
%
$
17,603
$
16,720
5.3
%
Occupancy and equipment
1,919
1,896
1.2
%
1,537
24.9
%
3,815
2,934
30.0
%
Professional fees
772
732
5.5
%
642
20.2
%
1,504
1,045
43.9
%
Marketing and business promotion
203
372
(45.4
)%
310
(34.5
)%
575
517
11.2
%
Data processing
380
412
(7.8
)%
441
(13.8
)%
792
845
(6.3
)%
Director fees and expenses
217
180
20.6
%
182
19.2
%
397
351
13.1
%
Regulatory assessments
382
155
146.5
%
147
159.9
%
537
288
86.5
%
Other expense
1,079
1,079
—
%
861
25.3
%
2,158
1,616
33.5
%
Total noninterest expense
$
13,627
$
13,754
(0.9
)%
$
12,245
11.3
%
$
27,381
$
24,316
12.6
%
Salaries and Employee Benefits. The
decrease for the current quarter compared with the previous quarter
was primarily due to decreases in vacation accrual and other
employee benefit expenses, partially offset by increases in
salaries and bonus accrual. The increases for the current quarter
and year-to-date period compared with the same periods of 2022 were
primarily due to increases in salaries and other employee benefit
expense, partially offset by decreases in bonus and vacation
accruals, and incentives tied to sales of SBA loans originated at
loan production offices. The number of full-time equivalent
employees was 272, 276 and 271 as of June 30, 2023, March 31, 2023
and June 30, 2022, respectively.
Occupancy and Equipment. The
increases for the current quarter and year-to-date period compared
with the same periods of 2022 were primarily due to new branch
openings during the second half of 2022. The Company opened 3 new
full-service branches in Dallas and Carrollton, Texas and Palisades
Park, New Jersey.
Professional Fees. The increases
for the current quarter and year-to-date period were primarily due
to increases in internal audit and consulting fees.
Marketing and Business Promotion.
The decreases for the current quarter compared with the previous
and year-ago quarters were primarily due to the decreased marketing
activities and advertisements.
Regulatory Assessments. The
increases in the current quarter and year-to-date period were due
to an increase in FDIC assessment rates and an adjustment of $113
thousand made for the previous quarter. The FDIC increased the
initial base deposit insurance assessment rate schedules by two
basis points beginning in the first quarterly assessment period of
2023.
Other Expense. The increases for
the current quarter and year-to-date period compared with the same
periods of 2022 were primarily due to increases in office expenses,
other loan related expenses and armed guard expenses attributable
to the branch network expansion. Provision for credit losses on
off-balance credit exposures of $36 thousand and $38 thousand was
included in other expense for the year-ago quarter and previous
year-to-date period, respectively, while the current quarter and
year-to-date period provision was included in provision (reversal)
for credit losses.
Balance Sheet
(Unaudited)
Total assets were $2.56 billion at June 30, 2023, an increase of
$55.8 million, or 2.2%, from $2.50 billion at March 31, 2023, an
increase of $136.3 million, or 5.6%, from $2.42 billion at December
31, 2022, and an increase of $211.8 million, or 9.0%, from $2.34
billion at June 30, 2022. The increases for the current quarter and
year-to-date period were primarily due to increases in cash and
cash equivalents and loans held-for-investment, partially offset by
a decrease in loans held-for-sale.
CECL Adoption
On January 1, 2023, the Company adopted the provisions of ASC
326 through the application of the modified retrospective
transition approach. The initial adjustment to the ACL reflects the
expected lifetime credit losses associated with the composition of
financial assets within in the scope of ASC 326 as of January 1,
2023, as well as management’s current expectation of future
economic conditions. The Company recorded a net decrease of $1.9
million to the beginning balance of retained earnings as of January
1, 2023 for the cumulative effect adjustment, reflecting an initial
adjustment to the ACL on loans of $1.1 million and the ACL on
off-balance sheet credit exposures of $1.6 million, net of related
deferred tax assets arising from temporary differences of $788
thousand. As a part of the adoption of ASC 326, the Company
reviewed and revised certain loan segments for the Company’s ACL
model. See Loan Segments Revision section of this release for a
reconciliation of revised loan segments to legacy loan segments,
which were utilized before the adoption of ASC 326.
Loans
The following table presents a composition of total loans
(includes both loans held-for-sale and loans held-for-investment)
as of the dates indicated:
($ in thousands)
6/30/2023
3/31/2023
% Change
12/31/2022
% Change
6/30/2022
% Change
Commercial real estate:
Commercial property
$
793,946
$
780,282
1.8
%
$
772,020
2.8
%
$
692,817
14.6
%
Business property
533,592
521,965
2.2
%
526,513
1.3
%
524,406
1.8
%
Multifamily
124,029
127,012
(2.3
)%
124,751
(0.6
)%
118,339
4.8
%
Construction
16,942
15,930
6.4
%
17,054
(0.7
)%
12,595
34.5
%
Total commercial real estate
1,468,509
1,445,189
1.6
%
1,440,338
2.0
%
1,348,157
8.9
%
Commercial and industrial
272,278
267,674
1.7
%
249,250
9.2
%
204,369
33.2
%
Consumer:
Residential mortgage
359,655
356,967
0.8
%
333,726
7.8
%
258,259
39.3
%
Other consumer
21,985
22,612
(2.8
)%
22,749
(3.4
)%
22,225
(1.1
)%
Total consumer
381,640
379,579
0.5
%
356,475
7.1
%
280,484
36.1
%
Loans held-for-investment
2,122,427
2,092,442
1.4
%
2,046,063
3.7
%
1,833,010
15.8
%
Loans held-for-sale
13,065
14,352
(9.0
)%
22,811
(42.7
)%
9,627
35.7
%
Total loans
$
2,135,492
$
2,106,794
1.4
%
$
2,068,874
3.2
%
$
1,842,637
15.9
%
The increase in loans held-for-investment for the current
quarter was primarily due to new funding and advances on lines of
credit of $252.8 million, partially offset by pay-downs and
pay-offs of $222.8 million. The increase for the current
year-to-date period was primarily due to new funding and advances
on lines of credit of $457.7 million and purchases of residential
mortgage loans of $15.7 million, partially offset by pay-downs and
pay-offs of $397.1 million.
The decrease in loans held-for-sale for the current quarter was
primarily due to sales of $16.8 million, partially offset by new
funding of $15.6 million. The decrease for the current year-to-date
was primarily due to sales of $43.9 million and pay-downs and
pay-offs of $4.1 million, partially offset by new funding of $38.3
million.
The following table presents a composition of off-balance sheet
credit exposure as of the dates indicated:
($ in thousands)
6/30/2023
3/31/2023
% Change
12/31/2022
% Change
6/30/2022
% Change
Commercial property
$
11,118
$
6,811
63.2
%
$
7,006
58.7
%
$
8,587
29.5
%
Business property
9,487
12,307
(22.9
)%
8,396
13.0
%
10,603
(10.5
)%
Multifamily
4,500
4,500
—
%
4,500
—
%
5,500
(18.2
)%
Construction
30,865
16,563
86.3
%
18,211
69.5
%
12,080
155.5
%
Commercial and industrial
279,584
279,543
—
%
254,668
9.8
%
221,580
26.2
%
Other consumer
445
399
11.5
%
692
(35.7
)%
1,086
(59.0
)%
Total commitments to extend credit
335,999
320,123
5.0
%
293,473
14.5
%
259,436
29.5
%
Letters of credit
6,027
5,400
11.6
%
5,392
11.8
%
4,984
20.9
%
Total off-balance sheet credit
exposure
$
342,026
$
325,523
5.1
%
$
298,865
14.4
%
$
264,420
29.3
%
Credit Quality
The following table presents a summary of non-performing loans
and assets, and classified assets as of the dates indicated:
($ in thousands)
6/30/2023
3/31/2023
% Change
12/31/2022
% Change
6/30/2022
% Change
Nonaccrual loans
Commercial real estate:
Commercial property
$
699
$
—
—
%
$
—
—
%
$
—
—
%
Business property
3,007
2,904
3.5
%
2,985
0.7
%
564
433.2
%
Total commercial real estate
3,706
2,904
27.6
%
2,985
24.2
%
564
557.1
%
Commercial and industrial
88
11
700.0
%
—
—
%
185
(52.4
)%
Consumer:
Residential mortgage
—
—
—
%
372
(100.0
)%
450
(100.0
)%
Other consumer
51
45
13.3
%
3
1,600.0
%
24
112.5
%
Total consumer
51
45
13.3
%
375
(86.4
)%
474
(89.2
)%
Total nonaccrual loans
held-for-investment
3,845
2,960
29.9
%
3,360
14.4
%
1,223
214.4
%
Loans past due 90 days or more and still
accruing
—
—
—
%
—
—
%
—
—
%
Non-performing loans (“NPLs”)
held-for-investment
3,845
2,960
29.9
%
3,360
14.4
%
1,223
214.4
%
NPLs held-for-sale
—
—
—
%
4,000
(100.0
)%
—
—
%
Total NPLs
3,845
2,960
29.9
%
7,360
(47.8
)%
1,223
214.4
%
Other real estate owned (“OREO”)
—
—
—
%
—
—
%
808
(100.0
)%
Non-performing assets (“NPAs”)
$
3,845
$
2,960
29.9
%
$
7,360
(47.8
)%
$
2,031
89.3
%
Loans past due and still accruing
Past due 30 to 59 days
$
428
$
779
(45.1
)%
$
47
810.6
%
$
682
(37.2
)%
Past due 60 to 89 days
—
13
(100.0
)%
87
(100.0
)%
—
—
%
Past due 90 days or more
—
—
—
%
—
—
%
—
—
%
Total loans past due and still
accruing
$
428
$
792
(46.0
)%
134
219.4
%
$
682
(37.2
)%
Special mention loans
$
5,406
$
5,527
(2.2
)%
$
6,857
(21.2
)%
$
6,313
(14.4
)%
Classified assets
Classified loans held-for-investment
$
6,901
$
6,060
13.9
%
$
6,211
11.1
%
$
3,980
73.4
%
Classified loans held-for-sale
—
—
—
%
4,000
(100.0
)%
—
—
%
OREO
—
—
—
%
—
—
%
808
(100.0
)%
Classified assets
$
6,901
$
6,060
13.9
%
$
10,211
(32.4
)%
$
4,788
44.1
%
NPLs held-for-investment to loans
held-for-investment
0.18
%
0.14
%
0.16
%
0.07
%
NPAs to total assets
0.15
%
0.12
%
0.30
%
0.09
%
Classified assets to total assets
0.27
%
0.24
%
0.42
%
0.20
%
During the previous quarter, NPLs held-for-sale of $4.0 million
were paid-off.
Allowance for Credit Losses
The following table presents activities in ACL for the periods
indicated:
Three Months
Ended
Six Months Ended
($ in thousands)
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
ACL on loans
Balance at beginning of period
$
24,694
$
24,942
(1.0
)%
$
21,198
16.5
%
$
24,942
$
22,381
11.4
%
Impact of ASC 326 adoption
—
1,067
NM
—
NM
1,067
—
NM
Charge-offs
(7
)
—
—
%
(47
)
(85.1
)%
(7
)
(59
)
(88.1
)%
Recoveries
23
1,102
(97.9
)%
29
(20.7
)%
1,125
49
2,195.9
%
Provision (reversal) for credit losses on
loans
157
(2,417
)
NM
(109
)
NM
(2,260
)
(1,300
)
73.8
%
Balance at end of period
$
24,867
$
24,694
0.7
%
$
21,071
18.0
%
$
24,867
$
21,071
18.0
%
Percentage to loans held-for-investment
at end of period
1.17
%
1.18
%
1.15
%
1.15
%
ACL on off-balance sheet credit
exposure (1)
Balance at beginning of period
$
1,545
$
299
416.7
%
$
216
615.3
%
$
299
$
214
39.7
%
Impact of ASC 326 adoption
—
1,607
NM
—
NM
1,607
—
NM
Provision (reversal) for credit losses on
off-balance sheet credit exposure
40
(361
)
NM
36
11.1
%
(321
)
38
NM
Balance at end of period
$
1,585
$
1,545
2.6
%
$
252
529.0
%
$
1,585
$
252
529.0
%
(1)
ACL on off-balance sheet credit exposures was recorded in Accrued
Interest Payable and Other Liabilities on Consolidated Balance
Sheets (Unaudited).
Investment Securities
Total investment securities were $138.7 million at June 30,
2023, a decrease of $6.0 million, or 4.1%, from $144.7 million at
March 31, 2023, a decrease of $3.2 million, or 2.2%, from $141.9
million at December 31, 2022, and a decrease of $394 thousand, or
0.3%, from $139.1 million at June 30, 2022. The decrease for the
current quarter was primarily due to principal pay-downs and calls
of $4.6 million, a fair value decrease of $2.3 million and net
premium amortization of $59 thousand, partially offset by purchases
of $1.0 million. The decrease for the current year-to-date period
was primarily due to principal pay-downs and calls of $8.7 million,
a fair value decrease of $312 thousand and net premium amortization
of $116 thousand, partially offset by purchases of $5.9
million.
Deposits
The following table presents the Company’s deposit mix as of the
dates indicated:
6/30/2023
3/31/2023
12/31/2022
6/30/2022
($ in thousands)
Amount
% to
Total
Amount
% to
Total
Amount
% to
Total
Amount
% to
Total
Noninterest-bearing demand deposits
$
635,329
29.0
%
$
653,970
30.5
%
$
734,989
35.9
%
$
988,454
49.5
%
Interest-bearing deposits
Savings
7,504
0.3
%
7,584
0.4
%
8,579
0.4
%
14,686
0.7
%
NOW
16,993
0.8
%
15,696
0.7
%
11,405
0.6
%
18,881
0.9
%
Retail money market accounts
464,655
21.1
%
436,906
20.3
%
494,749
24.1
%
458,605
22.9
%
Brokered money market accounts
1
0.1
%
1
0.1
%
8
0.1
%
1
0.1
%
Retail time deposits of
$250,000 or less
392,012
17.9
%
356,049
16.6
%
295,354
14.4
%
235,956
11.8
%
More than $250,000
451,590
20.7
%
454,464
21.3
%
353,876
17.3
%
186,024
9.3
%
State and brokered time deposits
220,148
10.1
%
217,019
10.1
%
147,023
7.2
%
95,000
4.8
%
Total interest-bearing deposits
1,552,903
71.0
%
1,487,719
69.5
%
1,310,994
64.1
%
1,009,153
50.5
%
Total deposits
$
2,188,232
100.0
%
$
2,141,689
100.0
%
$
2,045,983
100.0
%
$
1,997,607
100.0
%
Estimated total deposits not covered by
deposit insurance
$
1,034,148
47.3
%
$
1,019,689
47.6
%
$
1,062,111
51.9
%
$
1,199,502
60.0
%
The decrease in noninterest-bearing demand deposits was
primarily due to strong deposit market competition and the
migration of noninterest-bearing demand deposits to money market
accounts and time deposits attributable to the rising market rates.
To retain existing and attract new customers, the Bank offers
competitive rates on deposit products in the rising interest rate
environment.
The increase in retail time deposits for the current quarter was
primarily due to new accounts of $107.9 million, renewals of the
matured accounts of $88.8 million and balance increases of $4.9
million, partially offset by matured and closed accounts of $168.5
million. The increase for the current year-to-date period was
primarily due to new accounts of $408.2 million, renewals of the
matured accounts of $206.2 million and balance increases of $11.9
million, partially offset by matured and closed accounts of $431.9
million.
Liquidity
The following table presents a summary of the Company’s
liquidity position as of June 30, 2023:
($ in thousands)
6/30/2023
12/31/2022
% Change
Cash and cash equivalents
$
222,146
$
147,031
51.1
%
Cash and cash equivalents to total
assets
8.7
%
6.1
%
Available borrowing capacity
FHLB advances
$
625,115
$
561,745
11.3
%
Federal Reserve Discount Window
30,285
23,902
26.7
%
Overnight federal funds lines
65,000
65,000
—
%
Total
$
720,400
$
650,647
10.7
%
Total available borrowing capacity to
total assets
28.2
%
26.9
%
During the current year-to-date period, the Company increased
cash and cash equivalents by $75.1 million, or 51.1%, to $222.1
million and available borrowing capacity by $69.8 million, or
10.7%, to $720.4 million. As of June 30, 2023, the Company's cash
and cash equivalents and available borrowing capacity cover
approximately 91.1% of deposits not covered by deposit insurance
compared to 75.1% at December 31, 2022.
Shareholders’ Equity
Shareholders’ equity was $340.4 million at June 30, 2023, an
increase of $3.6 million, or 1.1%, from $336.8 million at March 31,
2023, an increase of $5.0 million, or 1.5%, from $335.4 million at
December 31, 2022, and an increase of $6.0 million, or 1.8%, from
$334.4 million at June 30, 2022. The increase for the current
quarter was primarily due to net income, partially offset by cash
dividends declared on common stock of $2.6 million and an increase
in other comprehensive loss of $1.6 million. The increase for the
current year-to-date period was primarily due to net income,
partially offset by cash dividend declared on common stock of $4.8
million, repurchase of 385,381 shares of common stock at a
weighted-average price of $17.76, totaling $6.8 million, and
cumulative effect adjustment upon adoption of ASC 326 of $1.9
million.
Stock Repurchase
On July 28, 2022, the Company’s Board of Directors approved a
repurchase program authorizing for the repurchase of up to 5% of
the Company’s outstanding common stock, which represented 747,938
shares, through February 1, 2023. On January 26, 2023, the Company
announced the amendment to the repurchase program, which extended
the program expiration from February 1, 2023 to February 1, 2024.
The Company completed the repurchase program during the previous
quarter. Under this repurchase program, the Company repurchased and
retired 747,938 shares of common stock at a weighted-average price
of $18.15 per share, totaling $13.6 million.
Issuance of Preferred Stock Under the
Emergency Capital Investment Program
On May 24, 2022, the Company issued 69,141 shares of Senior
Non-Cumulative Perpetual Preferred Stock, Series C, liquidation
preference of $1,000 per share (“Series C Preferred Stock”) for the
capital investment of $69.1 million from the U.S. Treasury under
the Emergency Capital Investment Program (“ECIP”). ECIP investment
is treated as tier 1 capital for regulatory capital purposes.
The Series C Preferred Stock bears no dividend for the first 24
months following the investment date. Thereafter, the dividend rate
will be adjusted based on the lending growth criteria listed in the
terms of the ECIP investment with an annual dividend rate up to 2%.
After the tenth anniversary of the investment date, the dividend
rate will be fixed based on average annual amount of lending in
years 2 through 10.
Capital Ratios
Based on the Federal Reserve’s Small Bank Holding Company
policy, the Company is not currently subject to consolidated
minimum capital measurements. At such time as the Company reaches
the $3 billion asset level, it will be subject to consolidated
capital requirements independent of the Bank. For comparison
purposes, the Company’s capital ratios are included in following
table, which presents capital ratios for the Company and the Bank
as of the dates indicated:
6/30/2023
3/31/2023
12/31/2022
6/30/2022
Well
Capitalized
Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted
assets)
13.12
%
13.09
%
13.29
%
14.44
%
N/A
Total capital (to risk-weighted
assets)
17.57
%
17.61
%
17.83
%
19.25
%
N/A
Tier 1 capital (to risk-weighted
assets)
16.34
%
16.37
%
16.62
%
18.11
%
N/A
Tier 1 capital (to average assets)
13.84
%
13.90
%
14.33
%
15.37
%
N/A
PCB Bank
Common tier 1 capital (to risk-weighted
assets)
16.00
%
16.03
%
16.30
%
17.79
%
6.5
%
Total capital (to risk-weighted
assets)
17.23
%
17.27
%
17.52
%
18.92
%
10.0
%
Tier 1 capital (to risk-weighted
assets)
16.00
%
16.03
%
16.30
%
17.79
%
8.0
%
Tier 1 capital (to average assets)
13.55
%
13.62
%
14.05
%
15.09
%
5.0
%
About PCB Bancorp
PCB Bancorp is the bank holding company for PCB Bank, a
California state chartered bank, offering a full suite of
commercial banking services to small to medium-sized businesses,
individuals and professionals, primarily in Southern California,
and predominantly in Korean-American and other minority
communities.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements. These
forward-looking statements represent plans, estimates, objectives,
goals, guidelines, expectations, intentions, projections and
statements of our beliefs concerning future events, business plans,
objectives, expected operating results and the assumptions upon
which those statements are based. Forward-looking statements
include without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or
achievements, and are typically identified with words such as
“may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,”
“estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases
of similar meaning. We caution that the forward-looking statements
are based largely on our expectations and are subject to a number
of known and unknown risks and uncertainties that are subject to
change based on factors which are, in many instances, beyond our
control, including but not limited to the health of the national
and local economies including the impact to the Company and its
customers resulting from changes to, and the level of, inflation
and interest rates; the Company’s ability to maintain and grow its
deposit base; loan demand and continued portfolio performance; the
impact of adverse developments at other banks, including bank
failures, that impact general sentiment regarding the stability and
liquidity of banks that could affect the Company’s financial
performance and stock price; changes to valuations of the Company’s
assets and liabilities including the allowance for credit losses,
earning assets, and intangible assets; changes to the availability
of liquidity sources including borrowing lines and the ability to
pledge or sell certain assets; the Company's ability to attract and
retain skilled employees, customers' service expectations; cyber
security risks; the Company's ability to successfully deploy new
technology; acquisitions and branch and loan production office
expansions; operational risks including the ability to detect and
prevent errors and fraud; the effectiveness of the Company’s
enterprise risk management framework; costs related to litigation;
changes in laws, rules, regulations, or interpretations to which
the Company is subject; the effects of severe weather events,
pandemics, other public health crises, acts of war or terrorism,
and other external events on our business. These and other
important factors are detailed in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2022 and other filings
the Company makes with the SEC, which are available at the SEC’s
Internet site (http://www.sec.gov) or from the Company without
charge. Actual results, performance or achievements could differ
materially from those contemplated, expressed, or implied by the
forward-looking statements. Any forward-looking statements
presented herein are made only as of the date of this press
release, and the Company does not undertake any obligation to
update or revise any forward-looking statements to reflect changes
in assumptions, the occurrence of unanticipated events, or
otherwise, except as required by law.
PCB Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
($ in thousands, except share and per
share data)
6/30/2023
3/31/2023
% Change
12/31/2022
% Change
6/30/2022
% Change
Assets
Cash and due from banks
$
22,159
$
25,801
(14.1
)%
$
23,202
(4.5
)%
$
23,125
(4.2
)%
Interest-bearing deposits in other
financial institutions
199,987
164,718
21.4
%
123,829
61.5
%
276,785
(27.7
)%
Total cash and cash equivalents
222,146
190,519
16.6
%
147,031
51.1
%
299,910
(25.9
)%
Securities available-for-sale, at fair
value
138,673
144,665
(4.1
)%
141,863
(2.2
)%
139,067
(0.3
)%
Loans held-for-sale
13,065
14,352
(9.0
)%
22,811
(42.7
)%
9,627
35.7
%
Loans held-for-investment
2,122,427
2,092,442
1.4
%
2,046,063
3.7
%
1,833,010
15.8
%
Allowance for credit losses on loans
(24,867
)
(24,694
)
0.7
%
(24,942
)
(0.3
)%
(21,071
)
18.0
%
Net loans held-for-investment
2,097,560
2,067,748
1.4
%
2,021,121
3.8
%
1,811,939
15.8
%
Premises and equipment, net
6,394
6,473
(1.2
)%
6,916
(7.5
)%
3,633
76.0
%
Federal Home Loan Bank and other bank
stock
12,716
10,183
24.9
%
10,183
24.9
%
10,183
24.9
%
Other real estate owned, net
—
—
—
%
—
—
%
808
(100.0
)%
Bank-owned life insurance
30,428
30,244
0.6
%
30,064
1.2
%
29,705
2.4
%
Deferred tax assets, net
4,342
3,753
15.7
%
3,115
39.4
%
11,869
(63.4
)%
Servicing assets
7,142
7,345
(2.8
)%
7,347
(2.8
)%
7,716
(7.4
)%
Operating lease assets
5,182
5,854
(11.5
)%
6,358
(18.5
)%
6,512
(20.4
)%
Accrued interest receivable
8,040
7,998
0.5
%
7,472
7.6
%
5,212
54.3
%
Other assets
10,657
11,390
(6.4
)%
15,755
(32.4
)%
8,379
27.2
%
Total assets
$
2,556,345
$
2,500,524
2.2
%
$
2,420,036
5.6
%
$
2,344,560
9.0
%
Liabilities
Deposits
Noninterest-bearing demand
$
635,329
$
653,970
(2.9
)%
$
734,989
(13.6
)%
$
988,454
(35.7
)%
Savings, NOW and money market accounts
489,153
460,187
6.3
%
514,741
(5.0
)%
492,173
(0.6
)%
Time deposits of $250,000 or less
552,160
513,068
7.6
%
382,377
44.4
%
270,956
103.8
%
Time deposits of more than $250,000
511,590
514,464
(0.6
)%
413,876
23.6
%
246,024
107.9
%
Total deposits
2,188,232
2,141,689
2.2
%
2,045,983
7.0
%
1,997,607
9.5
%
Federal Home Loan Bank advances
—
—
—
%
20,000
(100.0
)%
—
—
%
Operating lease liabilities
5,495
6,238
(11.9
)%
6,809
(19.3
)%
7,067
(22.2
)%
Accrued interest payable and other
liabilities
22,207
15,767
40.8
%
11,802
88.2
%
5,511
303.0
%
Total liabilities
2,215,934
2,163,694
2.4
%
2,084,594
6.3
%
2,010,185
10.2
%
Commitments and contingent liabilities
Shareholders’ equity
Preferred stock
69,141
69,141
—
%
69,141
—
%
69,141
—
%
Common stock
143,686
143,356
0.2
%
149,631
(4.0
)%
155,842
(7.8
)%
Retained earnings
138,315
133,415
3.7
%
127,181
8.8
%
115,992
19.2
%
Accumulated other comprehensive loss,
net
(10,731
)
(9,082
)
18.2
%
(10,511
)
2.1
%
(6,600
)
62.6
%
Total shareholders’ equity
340,411
336,830
1.1
%
335,442
1.5
%
334,375
1.8
%
Total liabilities and shareholders’
equity
$
2,556,345
$
2,500,524
2.2
%
$
2,420,036
5.6
%
$
2,344,560
9.0
%
Outstanding common shares
14,318,890
14,297,870
14,625,474
14,956,760
Book value per common share (1)
$
23.77
$
23.56
$
22.94
$
22.36
TCE per common share (2)
$
18.94
$
18.72
$
18.21
$
17.73
Total loan to total deposit ratio
97.59
%
98.37
%
101.12
%
92.24
%
Noninterest-bearing deposits to total
deposits
29.03
%
30.54
%
35.92
%
49.48
%
(1)
The ratios are calculated by dividing
total shareholders’ equity by the number of outstanding common
shares. The Company did not have any intangible equity components
for the presented periods.
(2)
Non-GAAP. See “Non-GAAP Measures” for
reconciliation of this measure to its most comparable GAAP
measure.
PCB Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
($ in thousands, except share and per
share data)
Three Months
Ended
Six Months Ended
6/30/2023
3/31/2023
% Change
6/30/2022
% Change
6/30/2023
6/30/2022
% Change
Interest and dividend income
Loans, including fees
$
32,960
$
31,229
5.5
%
$
21,243
55.2
%
$
64,189
$
41,433
54.9
%
Investment securities
1,136
1,102
3.1
%
668
70.1
%
2,238
1,144
95.6
%
Other interest-earning assets
2,742
2,205
24.4
%
535
412.5
%
4,947
763
548.4
%
Total interest income
36,838
34,536
6.7
%
22,446
64.1
%
71,374
43,340
64.7
%
Interest expense
Deposits
15,121
11,913
26.9
%
1,041
1,352.5
%
27,034
1,891
1,329.6
%
Other borrowings
—
209
(100.0
)%
54
(100.0
)%
209
105
99.0
%
Total interest expense
15,121
12,122
24.7
%
1,095
1,280.9
%
27,243
1,996
1,264.9
%
Net interest income
21,717
22,414
(3.1
)%
21,351
1.7
%
44,131
41,344
6.7
%
Provision (reversal) for credit losses
197
(2,778
)
NM
(109
)
NM
(2,581
)
(1,300
)
98.5
%
Net interest income after provision
(reversal) for credit losses
21,520
25,192
(14.6
)%
21,460
0.3
%
46,712
42,644
9.5
%
Noninterest income
Gain on sale of loans
769
1,309
(41.3
)%
2,039
(62.3
)%
2,078
5,816
(64.3
)%
Service charges and fees on deposits
369
344
7.3
%
330
11.8
%
713
633
12.6
%
Loan servicing income
868
860
0.9
%
755
15.0
%
1,728
1,455
18.8
%
Bank-owned life insurance income
184
180
2.2
%
175
5.1
%
364
347
4.9
%
Other income
467
328
42.4
%
349
33.8
%
795
683
16.4
%
Total noninterest income
2,657
3,021
(12.0
)%
3,648
(27.2
)%
5,678
8,934
(36.4
)%
Noninterest expense
Salaries and employee benefits
8,675
8,928
(2.8
)%
8,125
6.8
%
17,603
16,720
5.3
%
Occupancy and equipment
1,919
1,896
1.2
%
1,537
24.9
%
3,815
2,934
30.0
%
Professional fees
772
732
5.5
%
642
20.2
%
1,504
1,045
43.9
%
Marketing and business promotion
203
372
(45.4
)%
310
(34.5
)%
575
517
11.2
%
Data processing
380
412
(7.8
)%
441
(13.8
)%
792
845
(6.3
)%
Director fees and expenses
217
180
20.6
%
182
19.2
%
397
351
13.1
%
Regulatory assessments
382
155
146.5
%
147
159.9
%
537
288
86.5
%
Other expense
1,079
1,079
—
%
861
25.3
%
2,158
1,616
33.5
%
Total noninterest expense
13,627
13,754
(0.9
)%
12,245
11.3
%
27,381
24,316
12.6
%
Income before income taxes
10,550
14,459
(27.0
)%
12,863
(18.0
)%
25,009
27,262
(8.3
)%
Income tax expense
3,073
4,162
(26.2
)%
3,771
(18.5
)%
7,235
7,930
(8.8
)%
Net income
$
7,477
$
10,297
(27.4
)%
$
9,092
(17.8
)%
$
17,774
$
19,332
(8.1
)%
Earnings per common share
Basic
$
0.52
$
0.71
$
0.61
$
1.24
$
1.29
Diluted
$
0.52
$
0.70
$
0.60
$
1.22
$
1.27
Average common shares
Basic
14,271,200
14,419,155
14,883,768
14,344,769
14,865,990
Diluted
14,356,776
14,574,929
15,122,452
14,468,981
15,138,493
Dividend paid per common share
$
0.18
$
0.15
$
0.15
$
0.33
$
0.30
Return on average assets (1)
1.19
%
1.69
%
1.65
%
1.44
%
1.78
%
Return on average shareholders’ equity
(1)
8.82
%
12.46
%
12.48
%
10.62
%
14.13
%
Return on average TCE (1), (2)
11.08
%
15.70
%
13.85
%
13.35
%
14.92
%
Efficiency ratio (3)
55.91
%
54.08
%
48.98
%
54.97
%
48.36
%
(1)
Ratios are presented on an annualized
basis.
(2)
Non-GAAP. See “Non-GAAP Measures” for
reconciliation of this measure to its most comparable GAAP
measure.
(3)
The ratios are calculated by dividing
noninterest expense by the sum of net interest income and
noninterest income.
PCB Bancorp and Subsidiary
Average Balance, Average Yield, and
Average Rate (Unaudited)
($ in thousands)
Three Months Ended
6/30/2023
3/31/2023
6/30/2022
Average
Balance
Interest
Income/
Expense
Avg.
Yield/
Rate(6)
Average
Balance
Interest
Income/
Expense
Avg.
Yield/
Rate(6)
Average
Balance
Interest
Income/
Expense
Avg.
Yield/
Rate(6)
Assets
Interest-earning assets
Total loans (1)
$
2,097,489
$
32,960
6.30
%
$
2,072,415
$
31,229
6.11
%
$
1,804,368
$
21,243
4.72
%
Mortgage-backed securities
98,971
713
2.89
%
97,578
683
2.84
%
88,032
416
1.90
%
Collateralized mortgage obligation
26,228
262
4.01
%
26,743
256
3.88
%
25,929
125
1.93
%
SBA loan pool securities
8,364
81
3.88
%
9,027
82
3.68
%
11,164
43
1.54
%
Municipal bonds (2)
4,234
33
3.13
%
4,221
34
3.27
%
5,347
37
2.78
%
Corporate bonds
4,339
47
4.34
%
4,510
47
4.23
%
4,852
47
3.89
%
Other interest-earning assets
213,883
2,742
5.14
%
186,809
2,205
4.79
%
195,633
535
1.10
%
Total interest-earning assets
2,453,508
36,838
6.02
%
2,401,303
34,536
5.83
%
2,135,325
22,446
4.22
%
Noninterest-earning assets
Cash and due from banks
20,754
21,155
20,801
ACL on loans
(24,710
)
(26,757
)
(21,204
)
Other assets
71,200
75,175
73,137
Total noninterest-earning assets
67,244
69,573
72,734
Total assets
$
2,520,752
$
2,470,876
$
2,208,059
Liabilities and Shareholders’
Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$
465,564
3,929
3.38
%
$
485,962
3,445
2.87
%
$
464,829
430
0.37
%
Savings
7,767
5
0.26
%
8,099
5
0.25
%
14,989
2
0.05
%
Time deposits
1,054,191
11,187
4.26
%
916,751
8,463
3.74
%
521,606
609
0.47
%
Total interest-bearing deposits
1,527,522
15,121
3.97
%
1,410,812
11,913
3.42
%
1,001,424
1,041
0.42
%
Other borrowings
—
—
0.00
%
15,811
209
5.36
%
11,132
54
1.95
%
Total interest-bearing liabilities
1,527,522
15,121
3.97
%
1,426,623
12,122
3.45
%
1,012,556
1,095
0.43
%
Noninterest-bearing liabilities
Noninterest-bearing demand
628,127
687,575
889,691
Other liabilities
25,234
21,509
13,677
Total noninterest-bearing liabilities
653,361
709,084
903,368
Total liabilities
2,180,883
2,135,707
1,915,924
Total shareholders’ equity
339,869
335,169
292,135
Total liabilities and shareholders’
equity
$
2,520,752
$
2,470,876
$
2,208,059
Net interest income
$
21,717
$
22,414
$
21,351
Net interest spread (3)
2.05
%
2.38
%
3.79
%
Net interest margin (4)
3.55
%
3.79
%
4.01
%
Total deposits
$
2,155,649
$
15,121
2.81
%
$
2,098,387
$
11,913
2.30
%
$
1,891,115
$
1,041
0.22
%
Total funding (5)
$
2,155,649
$
15,121
2.81
%
$
2,114,198
$
12,122
2.33
%
$
1,902,247
$
1,095
0.23
%
(1)
Total loans include both loans
held-for-sale and loans held-for-investment.
(2)
The yield on municipal bonds has not been
computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by
subtracting average rate on interest-bearing liabilities from
average yield on interest-earning assets.
(4)
Net interest margin is calculated by
dividing annualized net interest income by average interest-earning
assets.
(5)
Total funding is the sum of
interest-bearing liabilities and noninterest-bearing deposits. The
cost of total funding is calculated as annualized total interest
expense divided by average total funding.
(6)
Annualized.
PCB Bancorp and Subsidiary
Average Balance, Average Yield, and
Average Rate (Unaudited)
($ in thousands)
Six Months Ended
6/30/2023
6/30/2022
Average
Balance
Interest
Income/
Expense
Avg.
Yield/
Rate(6)
Average
Balance
Interest
Income/
Expense
Avg.
Yield/
Rate(6)
Assets
Interest-earning assets
Total loans (1)
$
2,085,021
$
64,189
6.21
%
$
1,788,958
$
41,433
4.67
%
Mortgage-backed securities
98,278
1,396
2.86
%
86,138
723
1.69
%
Collateralized mortgage obligation
26,484
518
3.94
%
22,106
173
1.58
%
SBA loan pool securities
8,693
163
3.78
%
10,633
81
1.54
%
Municipal bonds (2)
4,228
67
3.20
%
5,489
73
2.68
%
Corporate bonds
4,424
94
4.28
%
4,944
94
3.83
%
Other interest-earning assets
200,420
4,947
4.98
%
197,267
763
0.78
%
Total interest-earning assets
2,427,548
71,374
5.93
%
2,115,535
43,340
4.13
%
Noninterest-earning assets
Cash and due from banks
20,953
20,594
ACL on loans
(25,727
)
(21,787
)
Other assets
73,177
70,384
Total noninterest-earning assets
68,403
69,191
Total assets
$
2,495,951
$
2,184,726
Liabilities and Shareholders’
Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts
$
475,707
7,374
3.13
%
$
448,496
743
0.33
%
Savings
7,932
10
0.25
%
15,315
4
0.05
%
Time deposits
985,851
19,650
4.02
%
553,818
1,144
0.42
%
Total interest-bearing deposits
1,469,490
27,034
3.71
%
1,017,629
1,891
0.37
%
Other borrowings
7,862
209
5.36
%
10,768
105
1.97
%
Total interest-bearing liabilities
1,477,352
27,243
3.72
%
1,028,397
1,996
0.39
%
Noninterest-bearing liabilities
Noninterest-bearing demand
657,687
865,294
Other liabilities
23,382
15,194
Total noninterest-bearing liabilities
681,069
880,488
Total liabilities
2,158,421
1,908,885
Total shareholders’ equity
337,530
275,841
Total liabilities and shareholders’
equity
$
2,495,951
$
2,184,726
Net interest income
$
44,131
$
41,344
Net interest spread (3)
2.21
%
3.74
%
Net interest margin (4)
3.67
%
3.94
%
Total deposits
$
2,127,177
$
27,034
2.56
%
$
1,882,923
$
1,891
0.20
%
Total funding (5)
$
2,135,039
$
27,243
2.57
%
$
1,893,691
$
1,996
0.21
%
(1)
Total loans include both loans
held-for-sale and loans held-for-investment.
(2)
The yield on municipal bonds has not been
computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by
subtracting average rate on interest-bearing liabilities from
average yield on interest-earning assets.
(4)
Net interest margin is calculated by
dividing annualized net interest income by average interest-earning
assets.
(5)
Total funding is the sum of
interest-bearing liabilities and noninterest-bearing deposits. The
cost of total funding is calculated as annualized total interest
expense divided by average total funding.
(6)
Annualized.
PCB Bancorp and Subsidiary
Loan Segments Revision
(Unaudited)
($ in thousands)
As a part of the adoption of ASC 326, the
Company reviewed and revised certain loan segments for the
Company’s ACL model. Before the adoption of ASC 326, commercial
property and SBA property loans were separately presented and
represented 63.0% and 6.6% of loans held-for-investment at December
31, 2022, respectively. The Company re-divided these loan segments
into commercial property (non-owner occupied), business property
(owner occupied) and multifamily loans as these new loan segments
are determined to share similar characteristics under the Company’s
ACL model. In addition, four loan segments before the adoption of
ASC 326 (commercial term loans, commercial lines of credit, SBA
term loans and SBA PPP loans), which represented 12.2% of loans
held-for-investment at December 31, 2022, are combined into a
single loan segment, commercial and industrial loans, as these
loans are determined to share similar risk characteristics under
the Company’s ACL model. In this release, loan segments on loan
related disclosures for prior period comparisons are revised
accordingly in order to be comparable to the Company’s new loan
segments.
The following table presents a
reconciliation of revised loan segments to legacy loan segments,
which were utilized before the adoption of ASC 326:
($ in thousands)
6/30/2023
3/31/2023
12/31/2022
6/30/2022
Revision for commercial real estate
loans
Revised loan segments:
Commercial property
$
793,946
$
780,282
$
772,020
$
692,817
Business property
533,592
521,965
526,513
524,406
Multifamily
124,029
127,012
124,751
118,339
Total
$
1,451,567
$
1,429,259
$
1,423,284
$
1,335,562
Legacy loan segments:
Commercial property
$
1,320,110
$
1,300,719
$
1,288,392
$
1,204,142
SBA property
131,457
128,540
134,892
131,420
Total
$
1,451,567
$
1,429,259
$
1,423,284
$
1,335,562
Revision for commercial and industrial
loans
Revised loan segments:
Commercial and industrial
$
272,278
$
267,674
$
249,250
$
204,369
Legacy loan segments:
Commercial term
$
90,213
$
91,740
$
77,700
$
73,885
Commercial lines of credit
165,162
159,268
154,142
111,916
SBA commercial term
15,900
15,566
16,211
16,985
SBA PPP
1,003
1,100
1,197
1,583
Total
$
272,278
$
267,674
$
249,250
$
204,369
PCB Bancorp and Subsidiary
Non-GAAP Measures
($ in thousands)
Return on average tangible common
equity, tangible common equity per common share and tangible common
equity to total assets ratios
The Company's TCE is calculated by
subtracting preferred stock from shareholders’ equity. The Company
does not have any intangible assets for the presented periods.
Return on average TCE, TCE per common share, and TCE to total
assets constitute supplemental financial information determined by
methods other than in accordance with GAAP. These non-GAAP measures
are used by management in its analysis of the Company's
performance. These non-GAAP measures should not be viewed as
substitutes for results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP measures that may be
presented by other companies. The following tables provide
reconciliations of the non-GAAP measures with financial measures
defined by GAAP.
($ in thousands)
Three Months
Ended
Six Months Ended
6/30/2023
3/31/2023
6/30/2022
6/30/2023
6/30/2022
Average total shareholders' equity
(a)
$
339,869
$
335,169
$
292,135
$
337,530
$
275,841
Less: average preferred stock
(b)
69,141
69,141
28,872
69,141
14,516
Average TCE
(c)=(a)-(b)
$
270,728
$
266,028
$
263,263
$
268,389
$
261,325
Net income
(d)
$
7,477
$
10,297
$
9,092
$
17,774
$
19,332
Return on average shareholder's equity
(1)
(d)/(a)
8.82
%
12.46
%
12.48
%
10.62
%
14.13
%
Return on average TCE (1)
(d)/(c)
11.08
%
15.70
%
13.85
%
13.35
%
14.92
%
(1)
Annualized.
($ in thousands, except per share
data)
6/30/2023
3/31/2023
12/31/2022
6/30/2022
Total shareholders' equity
(a)
$
340,411
$
336,830
$
335,442
$
334,375
Less: preferred stock
(b)
69,141
69,141
69,141
69,141
TCE
(c)=(a)-(b)
$
271,270
$
267,689
$
266,301
$
265,234
Outstanding common shares
(d)
14,318,890
14,297,870
14,625,474
14,956,760
Book value per common share
(a)/(d)
$
23.77
$
23.56
$
22.94
$
22.36
TCE per common share
(c)/(d)
$
18.94
$
18.72
$
18.21
$
17.73
Total assets
(e)
$
2,556,345
$
2,500,524
$
2,420,036
$
2,344,560
Total shareholders' equity to total
assets
(a)/(e)
13.32
%
13.47
%
13.86
%
14.26
%
TCE to total assets
(c)/(e)
10.61
%
10.71
%
11.00
%
11.31
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727619099/en/
Timothy Chang Executive Vice President & Chief Financial
Officer 213-210-2000
PCB Bancorp (NASDAQ:PCB)
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